Syllabus C. Internal Control C5. Internal audit and corporate governance

C5c. Internal v External Audit 3 / 3

Syllabus C5c)

Compare and contrast the role of external and internal audit.

Let's look at the difference in roles between internal and external audit

Objective & Planning

  • Internal Audit
    • Dictated by management - planning follows this

    • However, good corporate governance would allow IA a degree of independence over objectives

  • External Audit
    • Ensure accounts free from material misstatement and prepared in line with reporting framework.

    • Planned in accordance with ISAs

    • Work planned by themselves


  • Internal Audit
    • The amount / type gathered would depend upon the objective set

    • Eg It may just be a check that assets exist, with no concern over their value

  • External Audit
    • Governed by IAS 330 - gather evidence to address misstatement risk

    • The risk would have been analysed during planning and in the light of subsequent evidence


  • Internal Audit
    • Determined by the nature of the assignment

  • External Audit
    • Determined by statute & ISAs 700/5/6

    • Communicate to stakeholders